U.S. Earnings Tarnished in Europe

10/25/2012 9:34AM

Europe's economic woes are washing over U.S. multinational companies, contributing to a season of weak corporate earnings. Domestic sales are growing, as the U.S. housing market and consumer confidence recover. Photo: Getty Images.

This transcript has been automatically generated and may not be 100% accurate.

... the ... U S growth is anemic the world's economic engine China is sputtering ... but the weakest link for U S companies reporting third-quarter earnings you probably guessed this one it's Europe ... good morning ... welcome to the New Saab I'm Ralf Winkler ... Joe White is Wall Street is that co editor of the Corporate Intelligence plot for The Wall Street Journal and he's been tracking corporate results this earnings season of or in jail ... or ... thanks for joining us so ... now what's right what's remembers your Europe accounts for about twenty to twenty five percent ... of sales for big U S corporations seek huge number it's still a ... wall which companies ... we check this in in your yearly article in Marketplace today the Marketplace section which companies have really been hit hardest ... the company has extended to have to rely on European ... consumers is that ... we're in good example is the aural all ... of the year it is is is is down on ... it to the bottom ninety percent ... are in a report a loss to read you know they're they're ... they're they're making a ... bid us things are a little bit because the housing market is recovering a little bit ... when they talk about their situation ... design your as real threat operations ... just one example across ... or or anybody's toes of your consumer but it's the ... it's your your son's European companies ... anything that has to endure ... the taunts of this plan ... and it's it's not ... just ... the European economy ... which will talk about more in a minute but it's also the euro ... correct so ... yet it did that year over year the dollar as the dollar strengthens when you try and translate ... European sales ... backing the dollar's ... a buy from the euro bites fewer dollars so that that that is that ... it has also as a negative impact on your revenue growth cracked but loses all ... small ... companies are selling Western Europe and what that what they are able to bring back ... to the United States at least a consolidated their ... there they're core results ... yet again because of the currency effect so you really see company started to take some ... pretty drastic measures to deal with this any decisions that they put on for awhile in terms of restructuring its ... European operations are now seeing ... is that you know why this is a real prices regularly to see ... and do that but it is Kimberly Clark said the prisoners ... last year ... you can make money on this this is in our Realty ... it is not in itself I present ... so why is it basically see ... all of that market ... Procter gamble for Procter gamble was one ... of the lines of credit or to do so ... ok but I wanna bring up another company which you mention your story which three M which really ... illustrates the difference and in fortunes in the United States vs ... vs Europe a merry CA ... so overall ... in the third quarter of this year you saw that their sales rose two percent ... overall but in Europe that was despite falling ... six percent in euro ... sell ... right you know I look at the chart my second ... how to proceed yet it did it in the United States ... companies are doing ... reasonably well on oversold as the economy yes this is not super duper less indebted euro ... but here's the thing because companies are losing money in your up ... there to have to cut costs to run their operations or were they to ... get it to the city because of the sales ... rising through the song says his company to cut costs and try to raise prices try ... in order to keep their margins upended and to answer that he has three sides in ... this ... is an interesting and balanced on companies are missing their revenue forecasts more perhaps with sixty percent ... of its revenue forecast Party SP and Thomson Reuters ... but ... what it means more than half are eating earnings estimates that sixty percent or more is that imbalances that are really putting this ... off ... he does well in Nelson B isn't Sonic huge Kashpile have built up to buy back shares ... I've that it's different than these for some the Cubbies the right track ... as open it right in your Tennessee that is designed to bring ... to the firm that scene in growth on its overseas markets now now ... how long will European track Joe ... well ... what's the latest in a line if I knew that ... what the words ... movers and executives are saying this cycle of fear and long-term saw online ... I was younger it right ... is this is a top European car market ... and the ... down ... stay down ... for a lengthy period of time a year or two of this is the short term one quarter to quarter a trial of this is this is structural this is why is it for yesterday today was the two plants in Europe to get a pass in law ... must diminished demand ... and get ... the just briefly what I'd use this could turn ... maybe sooner than people expect ... this to throw this out there for two reasons one is you mention your story ... Europe is in his Your trains ... it actually is is is a smaller contributor to the top line right and also the currency ... and when people it's calling ... that may not be actually a headwind for that much longer ride in the year over year than she did the changes will even out for currency ... that's right ... well I think what we're seeing is that companies ... are are ... are using are ... taking action if I'm wrong with it but it but it is that you know what were restructured now ... and yes ... she is so that when things turn weakening more money up perhaps on a smaller base ... great job thank you so much for joining us this morning ...